Ga. Enters Struggle Over Lottery Funding for Schools

Georgia lawmakers and Gov. Zell Miller are the latest state
officials to take up a challenge that has foiled many policymakers in
recent years--finding a way to channel state-lottery proceeds to the
schools without either supplanting current funding or misleading
voters.

Georgia voters this fall will consider a proposed constitutional
amendment authorizing a lottery supporting education programs. Betting
that the referendum is a sure winner, state officials this week are sot
to grapple with the question of how to divide the estimated $250
million a year in proceeds.

As the lottery debate gains momentum in the Peach State, it has also
become a focal point in at least two other state capitals.

In Missouri, where voters last year rejected a tax hike for
education in part because of a widespread but mistaken notion that
lottery revenues were reserved for education, lawmakers are examining
whether the proceeds should indeed be "earmarked" for the schools.

In Florida, meanwhile, Gov. Lawton Chiles has joined educators in
criticizing the lottery for doing little to fund new education
programs, as was promised when it was created, and is pushing for
reforms.

Learning From Mistakes

Georgia officials acknowledge that they are traveling a course known
more for its failures than successes, but add that they have profited
from others' frustrations.

"We made an effort to at least learn from the mistakes some other
states have experienced," said Steve Wrigley, a senior aide to Governor
Miller, who used the lottery as a primary issue in his 1990
campaign.

Mr. Miller's proposal would earmark 30 percent of lottery profits
for each of three programs: pre-kindergarten programs for poor 4-year
olds; a capital-spending and equipment-purchase program for school
districts and colleges; and scholarships for poor but academically
promising high-school students.

The remaining 10 percent of the lottery funds would be put into a
reserve account.

In an effort to keep the lottery funds from blending into the
state's general-fund budget, the referendum would make lottery proceeds
a separate budget category.

Mr. Miller's proposal is scheduled to go before the House Industry
Committee this week. The chairman of that panel has already expressed
concerns about the Governor's strategy and emphasized the need for
Georgia to avoid the pitfalls experienced in other states.

"We want it to be used on one-time expenditures, where it can make
enhancements rather than getting locked in on certain programs," said
Representative Roy H. (Sonny) Watson Jr., who said he will urge
lawmakers to use lottery funds for "oneshot" efforts.

"We've got people in temporary housing and trailers, and the
computers in our classrooms are way behind," he said. "If we've got all
of the lottery funds obligated to ongoing programs, and the lottery
funds go down, then we've got to cut back or cut them out."

Mr. Watson said he wants to make sure that the games' profits do not
become the sole support for any long-term program.

The Lottery 'Distraction'

The Georgia officials' concerns spring from the lottery-funding
misfortunes triggered in other states by the euphoria and subsequent
letdown created by new games.

Voters with high expectations who approve lottery games because they
will benefit schools often become bitter once they learn that the funds
do not make much difference, said John L. Myers, the education program
director for the National Conference of State Legislatures.

In 33 states and the District of Columbia, lotteries raised nearly
$7.5 billion during fiscal 1990--barely more than 3 percent of total
tax collections in those jurisdictions.

"We've asked whether any [revenue source] should be earmarked, and
the answer is that it is clearly not a good idea to earmark taxes for
education," Mr. Myers said. "Unless you earmark a tax large enough to
support the program and that grows with the need, you are going to fall
short, and with education, there is just no Way."

State officials in Texas, where voters last fall approved a state
lottery, quickly dismissed the idea of pegging proceeds to school
funding.

"It was used as an argument when they thought the votes would be
close, but honestly, the notion of earmarking the lottery money was
faint," said Soma Hernandez, the education policy director for Gov. Ann
W. Richards.

"A stable, reliable funding source is what you need for education,
and you can't get that from a lottery," Ms. Hernandez said.
"Unfortunately, even the most well-intentioned groups who think it will
help the schools find out that, in the long run, it won't. It's just a
distraction. We didn't want to go through that."

Despite the drawbacks, Mr. Myers noted that several states are
considering either establishing a lottery or expanding the current
games into new areas.

'Buy Back the Lottery'

In Missouri, the crushing defeat of last fall's education-funding
referendum is pushing some lawmakers in the other direction, toward
earmarking lottery revenues.

Apparently, many voters decided against a tax hike for the schools
because they thought that lottery funds

were already being devoted to education, even though game proceeds
in fact are not earmarked and go into the state's general budget
fund.

In the wake of the defeat, several bills have been introduced to
earmark lottery proceeds--about $73 million a year for education.

Cautious state education officials have warned, however, that funds
would be spread too thin and further confuse voters.

At the same time, Governor Chiles of Florida is trying to restore
the lottery's credibility by proposing new state taxes that would begin
to halt the financial shell game that has irked educators and confused
voters.

"We must buy back the lottery," he said in his State of the State
Address last month. Mr. Chiles has proposed a plan that would impose
the state's sales tax on several previously exempted items. The
proposal would generate $155 million to take the place of misdirected
lottery funds, which would then be freed to finance "the enhancement of
education."

Mr. Chiles, who used lottery reforms as a campaign theme, has often
noted educators' frustration with the promised but largely elusive
benefits of the lottery.

In a separate but related effort, some lawmakers are pushing a plan
under which 70 percent of lottery proceeds aimed at schools would be
sent directly to local school districts, where officials would be able
to determine how to spend the funds.

Vol. 11, Issue 20, Pages 18, 20

Published in Print: February 5, 1992, as Ga. Enters Struggle Over Lottery Funding for Schools

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